Having your Management Company Charge Late Rent Fees

Written by admin on April 23rd, 2011

Being a property investor and being a landlord is like wearing two hats at the same time within the realty world. It must be remembered that when you purchase rental property, even with hiring property management your responsibilities don’t end there.

You need to keep on top of your investments at all times. Often what happens is the deposits of the rental collection don’t go in for a few days and you may be noticing that there are several deposits being made. This could be as a result of late rental payments which may mean multiple deposits. It may not seem like a big deal but it can end up costing you money and setting a bad scene.

Consider your banking transaction fees. When you look at them from a monthly point of view they don’t seem like much, but when you observe them on your yearly financial statement you will see that they can be quite substantial. This of course will depend on your banking arrangements in respect to the plan you have with your bank.

Another point to consider is that you are allowing tenants to form bad habits when they pay late on a consistent basis. If tenants know there is no penalty for being late in their rent, it is easy for them to get into the habit of dropping off the rent when they get a chance. What started out as being a day late now works into two or three days or even a week. You are opening yourself up to unnecessary risks here of tenants potentially falling behind in their rent.

It doesn’t mean that you have to charge an exorbitant amount of late rent fees, but it should be substantial enough to cover your bank costs. You also have to keep in mind that you are paying property management for a certain amount of duties. If they have to keep chasing tenants down for the monthly rent they may consider boosting their fees to you, and then you are once again increasing your expenses.

If you always keep in mind that the little things add up, you will be much further ahead in the investment world. This is particularly important if you have the intention of expanding your portfolio. You will want to put a large gap between your expenses and your returns, with you returns being far more substantial of course.

In order to enforce your late rental payment fees you should have a letter delivered to all your tenants and not just spring this on them. Many of those that have fallen into the late payment habit will react negatively to this sudden change in policy otherwise.

Ideally this policy of charging a late fee for late rental payments is something you should put into effect the moment you acquire the property. This way the ground rules are set right from the start.

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